Ask yourself these three questions:
- What do we do that’s unique?
- What do we have that no one else has?
- And if they do, how do we do the next thing?
Then determine whether you’re selling innovation or execution. “Amazon is all about execution,” explains Mike Wright, Striata. “They just do it better — more scale, greater efficiencies.. They also weren’t the only online book store, e-commerce website or cloud service provider. The secret is that you don’t always need to be first. First mover advantage is good, but better wins.”
Here’s the challenge — when your model is built on execution, you need to own the market. That’s how you create efficiencies and economies of scale.
Striata looks to straddle both execution and innovation. “We understand that some parts of our business have become commoditised by necessity. These need to be incredibly efficient. But you can’t take your eye off the ball — you need to keep innovating, because someone else might become more efficient.”
Mike also likes the adage, ‘Where there’s mystery, there’s margin’. “The moment someone susses you out, there’s no longer a mystery, and your margin goes down. It’s too easy in this day and age to figure out what everyone else is doing, replicate it and then do it more efficiently.
“This is why you need to understand your business from two angles: What sets us apart, and what makes us efficient. At scale, you need the second especially — you need to do lots, at volume. What sets you apart are the things that no-one else can do, and that’s where your margin lies.”
DNA IN ACTION
Mike Wright didn’t discover he was an entrepreneur at heart when he turned 30. He had entrepreneurial DNA from a young age. He studied accounting because he knew it would be good for business, and he spent a few years in the corporate world learning as much about business, marketing, sales and profit making as he could. Then, when he was ready, he took the plunge.
Grade 2: Mike sells silkworms to earn pocket money. He has a little silkworm factory, and all of his mother’s friends are compelled to buy a shoebox full of mulberry leaves and tiny silkworms.
Grade 8: Knowing he will go into business one day, Mike chooses accounting as a subject.
First year at Varsity: With his partner and best friend, Mike launches a business selling ‘Class of….’ silkscreened t-shirts to matric classes. This business runs profitably for six years.